As pay equity becomes an increasingly pertinent topic in HR circles and American culture at large, pay transparency has received particular attention as a way to help eliminate the gender and racial wage pay gaps. In the U.S., aside from federal laws pertaining more broadly equal pay, pay transparency statutes differ by state and are relatively underdeveloped. Since pay transparency is still uncommon in American jurisprudence, folks may be surprised to learn about pay transparency trends overseas.
Here are four initiatives occurring in some of the most affluent countries in the world: Norway, Switzerland, Germany, and Canada:
In Norway, since 2001, it has been possible to see everyone’s salary and tax information online. The motivation for this was to increase trust in the social-security system (which comes with a very high income tax), but Norway ranks 3/144 on the World Economic Forum’s 2016 Global Gender Gap Report.
Switzerland is known for its history and culture of financial secrecy. A group of Swiss trade unions – who claim that women earn about 20% less than men in the same jobs – started the Zeig deinen lohn (“Show your income”) campaign, asking folks to upload a picture with their salary figure to a website. It will be interesting to see if this movement spearheads any legal initiatives.
Germany introduced its own Wage Transparency Act in January that allows people to see what co-workers earn… sort of. The law only applies to companies with over 200 employees, and displays the median salaries for roles rather than specific quotes for individual employees.
4) Ontario, Canada
Ontario recently enacted its own Pay Transparency Act, which not only outlaws the salary history question, but also set up a compliance system requiring larger employers to report – to the province and publicly at their own workplace – compensation gaps based on gender and other diversity factors.
Pay Transparency in the U.S: Companies have the Power
It may be a while before the U.S. government adopts similar laws to those of a few European countries, but in the meantime U.S. companies should carefully consider their approach to pay transparency in the war for talent. Buffer and Whole Foods are among the handful of major businesses that have adopted salary transparency policies. Buffer, in particular, has notably gone to the “extreme” by displaying employee salaries publicly on their website, creating a very open culture around employee pay.
But there’s no hard and fast statistics about how pay transparency aids hiring practices in this hot-blooded economy. Companies with such policies have seen some success in the realms of recruiting and retaining. Buffer’s PR manager Hailey Griffs job applications increased, according to Time. SumAll – a marketing firm with a similarly open culture – told Business Insider that the company’s initiatives have cut way down on turnover.
Doing Right by an Evolving Workforce
Arguments against pay transparency suggest that if employees know how much their co-workers make, it could create an unhealthy environment of social comparison. But on a more sobering note, companies with opaque policies and limited budgets are able to hire a larger number of exceptional employees at less – and potentially inequitable – salaries.
Organizations must find a balance that works for them by incorporating a stance on pay transparency that fits their culture. But whether companies decide to keep pay on the down-low or make it an open topic in the workplace, there's no excuse for harboring pay inequity. This evolving workforce wants to be paid equitably and competitively – and work for companies that take initiative when it comes to closing the pay gap.
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